Net Volume

Notes:

These indicators and concepts are specifically designed for TradingView.com

Overview

NVI is based on the concept that volume, which represents the number of shares or contracts traded, is a significant factor in price movement. By analyzing the net volume, which is the difference between up volume and down volume, traders aim to identify whether accumulation or distribution is occurring in the market.

Here's a simplified overview of how NVI works:

1. Calculation: NVI is calculated by starting with an initial value, typically 1 or 100, and then adding or subtracting a percentage of the current day's net volume based on the direction of the price movement. If the price closes higher than the previous day's close, a portion of the net volume is added to the NVI. If the price closes lower, a portion is subtracted.
2. Interpretation: Traders monitor the NVI line on a chart to analyze its movements in relation to price. When the NVI line rises, it indicates that buying pressure is increasing, potentially signaling a bullish trend. Conversely, a declining NVI line suggests rising selling pressure and a possible bearish trend.
3. Confirmation: Traders often look for confirmation from other technical indicators or chart patterns to strengthen their analysis. They may consider factors such as moving averages, trendlines, or support and resistance levels alongside the NVI readings to make more informed trading decisions.

How to trade Net Volume

Net volume is a technical analysis indicator that is used to track the difference between buying and selling activity in financial markets. The indicator measures the total volume of shares or contracts traded on a given day, and then calculates the difference between the volume of buying and selling activity.

How to Trade

This is one of the simpler indicators and you can use Net Volume to confirm price movements and identify potential trend reversals. For example, if the Net Volume is positive and increasing while the price is also increasing, it suggests that there is strong buying pressure behind the asset and the trend may continue. Conversely, if the Net Volume is negative and increasing while the price is decreasing, it suggests that there is strong selling pressure behind the asset and the trend may continue.

There are other ways to see net volume. Net Volume indicators can be displayed as a line chart or as a histogram. The line chart displays the Net Volume as a continuous line, while the histogram displays the Net Volume as a series of bars, with positive values displayed in green and negative values displayed in red.

There are several different types of Net Volume indicators that traders can use, including:

1. On-Balance Volume (OBV): OBV is a Net Volume indicator that tracks the cumulative buying and selling pressure over time. It adds the Net Volume of each period to a running total, with positive values indicating buying pressure and negative values indicating selling pressure.
2. Volume Price Trend (VPT): VPT is a Net Volume indicator that takes into account the price movement of an asset as well as the volume. It assigns greater weight to periods where the price movement is more significant, indicating that there is more conviction behind the buying or selling pressure.
3. Money Flow Index (MFI): MFI is a Net Volume indicator that uses both the price and the volume of an asset to determine the buying and selling pressure. It calculates the ratio of positive Net Volume to negative Net Volume over a given period and uses this ratio to generate an indicator value between 0 and 100.

How to Calculate

The Net Volume indicator is calculated by taking the difference between the volume of buying trades and the volume of selling trades over a given period. If the buying volume is greater than the selling volume, the Net Volume will be positive, indicating that there is more demand for the asset. Conversely, if the selling volume is greater than the buying volume, the Net Volume will be negative, indicating that there is more supply of the asset. Here's an example of how the Net Volume indicator is calculated:

Let's say that over the course of a trading day, there were 10,000 buying trades with a total volume of 1,000,000 shares, and 8,000 selling trades with a total volume of 800,000 shares. The Net Volume for the day would be calculated as follows:

Net Volume = Buying Volume - Selling VolumeNet Volume = 1,000,000 - 800,000Net Volume = 200,000

In this example, the Net Volume is positive, indicating that there was more demand for the asset than supply. This suggests that the price of the asset may continue to rise in the short-term.